SIFA 8.1 Summary

The detailed financial resources standards that we apply to investment firms are set out in the Interim Prudential sourcebook for Investment Businesses (IPRU(INV)). The rules and guidance in this sourcebook help us meet our statutory objectives of protecting consumers and maintaining market confidence. By setting minimum capital standards, this sourcebook seeks to reduce the risk that investment firms will be unable to meet their liabilities and commitments to consumers and counterparties.

Chapters 1 and 13 of IPRU(INV) relate to personal investment firms. Where firms do a mixture of activities that includes mortgage and general insurance business, they also need to consider the interaction with the rules in PRU 9.

The rules of Chapter 13 apply differently to firms depending on what category of firm they are. This section of the Guide only discusses those parts that relate to a low resource firm i.e. a firm that:

• is a Category B3 firm (see Appendix 13(1) of IPRU(INV) - Defined terms for Chapter 13);
• is not a network;
• has fewer than 26 advisers or representatives; and
• is not permitted to carry on discretionary portfolio management.

The relevant sections of Chapter 13 for such firms are IPRU(INV) section 13.1 and sections 13.9 to 13.10. The rules and guidance set out in these sections relate to four key areas: financial resources, professional indemnity insurance, record keeping and notification requirements.